Future Proofing my life: Deposit saving then MFW journey in under 13 years

LadyWithAPlan

South_coast said:

LadyWithAPlan said:

Luckily I have a fairly frugal life (if one can say that spending nearly £5k last quarter on fun so as I type I realise I have conned myself that way) 

Well I have been thinking that myself 🤣! You've said a number of times what a frugal life you lead, but you do spend an awful lot of money!

You are not wrong Reflecting on this  is a very good exercise for me especially at the start of the year and I think my perceived frugality is because of comparison -   I live in London and choose to have a truly fabulous big  life - have made a lot of money, then a little, then more and used to work in a v high paying field and also a glamorous creative field but I always live a v upmarket lifestyle with friends of all money brackets   - private members clubs, my travel, where I go out, my friends own restaurants and clubs, what I have done for work...(even when I earnt not much I still lived this life just more frugally )... 

So I am frugal in a high end world with things like travel (inc work), yachts and champagne. 
(Please dont kick me off MSE!) 

I do think my fabulous life did partially text ex off - he felt he couldnt compete I think- but I can easily afford my lifestyle, I am not in debt and I have the connections as they are my friends and my long term social circle... £5k a quarter in voluntary spend did include a fabulous holiday in the States - part paid by a work trip that pre-emptied it and free accommodation there, I also was in Europe as well and bought some clothes and Xmas.  It is about a balance which I am changing for one year as I sort this home issue out.

So I am frugal living a big fabulous life is my rephrase..
 It is a trade off - I love London, I love travel - its part of my 'rich life' as per Ramit Sethi's phrase - its how I choose to live and I have decided against having kids and so far owning a home and having time (I could work much harder)  
I do have friends who also easily spent a house deposit on clothes (easy to do when they are in fashion so need to be seen to be current)  v Sex in the City with the shoes ... luckily I like to look individual and love some vintage and have huge wardrobe(s!)

When I started chanting over a decade ago I also started putting more effort into my life and my creativity as opposed to living a fabulous party life without focus so I do feel I am living the Middle Way (as opposed to an extreme at either end). I only wanted to buy a home during the first pandemic so thats why this ship is slowly turning  

There will always be a foot in fabulous in LaPlan's life   

daisy_1571 said:

Awwww, mortgage pig, haven't thought of that term for ages, loved having our mortgage pig  😀 

Daisy xx

Mine has wings and is slightly glittery I dont use her often enough but will aim to put spare change in their more this year.
How did you use yours? Mine only had £7 in!

PennysIntoPounds said:

....
I'd just set my search to min beds and max amount with garden essential in London and go see everything that looks interesting!

I love this idea! 
As you say  walking tube access is important - I currently can get a direct short bus ride home from Soho even at 3am and also a quick tube home if its still running as  I am on a tube line that runs 24hrs over the weekend.

Watty1 said:

I like that last suggestion.  Think of the fun you can have exploring areas of London you might not know each weekend, visiting cafe's walking around, checking libraries and so to see if there is a "community" feel.  Looking forward to the search beginnning!

I will report back - it is a great idea. I like your reverse engineering as well. 

Cheery_Daff said:

Watty1 said:

I like that last suggestion.  Think of the fun you can have exploring areas of London you might not know each weekend, visiting cafe's walking around, checking libraries and so to see if there is a "community" feel.  Looking forward to the search beginnning!

This is what we did when we were looking (not in London). Interspersed DIY with days out in different areas, popping into cafes and wandering round the streets. Not even going to view specific houses at that point, just getting a feel for the areas. It was lovely, and we discovered plenty of cheerful places we didn't end up living in 😂 And once witnessed an incompetent lunchtime drug deal while we were having a cuppa in a cafe - we didn't have that place high on the list 😂

Thank you Cheery - you have all convinced me. London is so huge and I cant afford to buy a garden where I live now ( a poky dark 2bed if I am lucky) I love where I live but its crazy expensive. So learning new areas is important as I have only lived in maybe 6 London areas over the decades as well as abroad.

I will state I used to live in Soho  and spent lots of time in Kings X/Camden (where every other person stinks of we*d)/East London so drug  (and other) deals are often v competent as they are all very practised ! So that wouldn't put me off despite me not personally participating in such activities. 

savingholmes said:

Good luck LWAP. I think part of the problem is the uncertainty around when invoices will be paid. I have read other's diaries which suggest in that situation you give yourself a fixed month's float (from your current savings) - and then 'pay' yourself on a set day regardless and plan spends accordingly. Then top up the original source of your float from your invoices when they are paid. Obviously keep chasing invoices and seek out alternative income sources as you are already doing.

I know a lot of people here use PADs. I prefer the give every £ a job system - which is very YNAB I think - where I upfront at the start of the pay month decide how much to send to savings. They each go out on different days so if there is an issue I can hold some back - but I've set an intention of how much to save at the start of the month. I'm by no means perfect and I have had a high voluntary spend in the last few months. We need to get to the point where we are telling our money where to go rather than letting systems tell us where it actually went. I pay my extra pension from my gross.

HTH 

PADs?

On the invoices you are correct, - the uncertainly not only affects my deposit  as it is probably £20k extra for that) but also my willingness to take on a £2k+/month mortgage and attendant higher costs) . I found that having to have such a large float in my banks and holding back investing so I could indeed cover my bills no matter what happened definitely has led to overspending as I had the room - despite having a monthly budget and 40 virtual pots,. Too easy to just transfer money from the unused pots back into the main account to cover overspend and cc. This is why I like ynab already as the tracking and strictness of the dashboard where you have to move money from one area (eg house insurance pot) to another (drinks out). YNAB really makes you clear on the consequences in a way my virtual pots didnt

YNAB  also is in your face about any cc float you may be using. This month CC will be £200 or under as opposed to the £700-£2k it can be so my credit score is already happier. As I was buying extra Xmas gifts in Dec I could see the mounting cost as I moved money in ynab every day so I think it meant o really thought about extra spending and  used the £80 sains double points, my survey money and my student card was whipped out wherever possible!
I have a feeling if I had used ynab earlier my voluntary spending would have been a lot less... as ynab poor is a definite good feeling (as all money in your accts is clearly assigned)

The setting intention to save is great. I always apportion each payment in as tax (20%/savings 15%/sipp (15%) then the rest is for spend but if I have rent coming up .. so I am currently planning to get 3 months ahead on essential bills on ynab so will temporarily slow savings down til that happens. Plus of course Tax is this month and first time I am filing my ltd  corporation  as well as SE so more uncertainly.
Either way in ynab I have clearly assigned house deposit/sipp/tax money already in their categories  so I will hate having to move money out of that for anything other than tax. I have tax money saved in PB's  so I can make those hse savings instead and not lose a month in there.
I have overpaid my personal tax this year on account which will cover the corp tax  fully I think depending on my chosen dividends... but I am not sure if hmrc will pay it back quickly enough for me to cover it.

TAX is my this weekend to do - finally finalising last query bit - and then getting it off to acctant with all my decisions on dividends etc.
I have discovered I actually can file my own Limited co accts despite not being a chartered acct - I have the software to do so. I think though this first year I will pay an acctant to do it, a bill I have not yet budgeted for...

I am helping (for free) a family member, and 2 friends (one I barter his services for)  to do their tax returns so I need mine done early. It really helps understanding accountancy and keeping abreast of tax changes to maximise ones earnings. The fact that instead of holding money for the deposit over the last 3 years I have added to my sipp especially on HR tax payer years... has really helped.

TallGirl

I think it is perfectly ok to spend and being part of MSE just depends what your goals and aims are. You can do expensive things but as long as you get the best price, use cashback, check for discount codes etc you are being MSE. 

As you said only really wanted to buy your own home a relatively short time ago so good on you to having that mindset change. You do live really cheaply which most others cannot not but long term when you come to retire it would be quite an unsettled existence having to move when the landlord demands plus you would obviously still have rent. Being MF and in your own home will not only save your on rent in retirement but also give you so much security. 

Another vote for checking other areas out. I was adamant I would only live in a 1 mile radius from where my first house was but I stretched it and I actually prefer here. I would never had said that before I lived here though. The benefits were not have obvious beforehand. 

Good luck with YNAB I am not into that at all or understand it but it seems to work really well for you. 

savingholmes

PADs are Payment a Day - Tilly who you liked did that a lot although her's became knowns as Tilly Tidies. Jwil does PADs. I agree with TG and others - MSE is not about how much you spend - but whether you are spending wisely in line with your income, saving and investing appropriately ideally and getting out of debt / a reliance on debt but at the most basic - trying to get the best value from the money you do spend.

Your life sounds fabulous - and fits your desires - that doesn't mean I would choose it for me - but the latter is irrelevant. I was struck a while ago where you'd done your sums on whether you were better off with money in the stock market or bricks and mortar. Only you can make that judgment call - and if your money is safe where you are getting your 12% return it is unlikely that you are losing out by your current approach. I wouldn't be able to cope with the uncertainty of renting having been so long a mortgaged owner but it does offer you a lot of freedom of choice over where to live at any time. 

I personally like some tangible assets but agree with you that many in the FI world don't go that route. I'm 'hedging' my bets and took the longest mortgage I could at the time. Then because I can create a fully Tax Free Lump Sum (TFLS) through my work pension - I am only paying £20 above the minimum to my mortgage each month (which knocks off 6 months) - despite it being due to continue until I'm 73.5!!! I am instead planning to use my pension AVCs and therefore stocks and shares - to create the biggest tax free lump sum I can - in the hope that I end up mortgage neutral and have choices later in life. Last year that meant I added to my emergency fund, paid almost £8K off my mortgage and added £5.4K plus growth to my AVCs - i.e. future TFLS. Once I've moved (downsized) - I hope to have a fully funded EF and if I'm lucky send up to £20K a year to AVCs from my gross between now and when I retire at which point I'm likely to be mortgage neutral but leave the money invested and just use what I need after taking DB pension(s) early. If I look at my financial improvement over the last 2 years however - I have also benefitted from house value growth of c£45K cf to my mortgage valuation after divorce (although I was adamant it was undervalued by £10-20K at the time). However property values can drop so that's by no means a certainty either.

What I'm trying to say - is that you came back from the US all fired up for owning your own home and if that is what you want - fabulous - go for it. But if really you value freedom of choice and a more liquid nest egg then that's a perfectly valid choice too - assuming you are sufficiently diversified to mitigate risk. It's the latter part that I would question from your description.

Watty1

I think it is just fine to have the "big life" when you can afford it.  I think the whole point of MSE is to do it in the most financially prudent way.

I have a very wealthy friend who, on her divorce, traded her huge country mansion for a very small terraced cottage that she could buy outright. She had a good job and invested the rest with advice. Her explanation was small but lovely house and a big life.  I admired her for that. 

I'm excited to see what you decide this year.

skint_spice

Fabulously Frugal - you do you LWAP, I for one enjoy living vicariously 😂

LadyWithAPlan

Watty1 said:

I think it is just fine to have the "big life" when you can afford it.  I think the whole point of MSE is to do it in the most financially prudent way.

I have a very wealthy friend who, on her divorce, traded her huge country mansion for a very small terraced cottage that she could buy outright. She had a good job and invested the rest with advice. Her explanation was small but lovely house and a big life.  I admired her for that. 

I'm excited to see what you decide this year.

Your friend sounds awesome -  to downsize a home (with all its cachet) is probably the most difficult thing of all and really shows she has a very clear understanding of her life, money and gives her freedom The huge country mansion also probably costs loads in upkeep as well. I have family members who own big houses with lots of land, animals, horses etc and is a definite lifestyle choice as it takes both time and money. Perfect for them but you may remember how my summer of playing Ms Doolittle looking after the place - fun as a vacation but exhausting and I got no work done. I also refused to drink due to all the responsibility and with the BITEY BARKY DOG I may not have stopped.

NB Bitey dog has now bitten everyone in the family apart the kids who keep away...I still have the scar. They tried to give him to someone who loves him and is great with dogs, ... but then Bitey dog bit her husband... Family member has other rescues and no problems but this one bites.

My life style of travel and adventure and freedom works for me - never been married or took money from a partner or a parent  - and its also good for my nephews and in particular my nieces to see  my life - a woman can chose to not have kids, she can afford a life and work she chooses, she can be in complete control of her money if educated  (and lucky) enough, she can  choose to travel the world.

The person who decides what I spend on was me (and  is now YNAB) 

Yes there are then choices (not sacrifices as you gain one thing and lose another) re how big my apartment is etc and the size of my car - I have downgraded from convertible sportscars to now having no car at all but why I once needed a sportscar living in central London is a mystery to me! (20's being flashy I think) - however my life feels fully lived and fabulous I really don't want young girls growing up thinking there is only one choice of how to live a life. Some women eg in Iran have no choice at all so I feel I want to fly a bigger flag even whilst I am doing vouchers and cashbacks

I will rewrite my 2024 slogan (adding to my signature)
There will always be a (beautiful stilettoed) foot in fabulous in LaPlan's life   

@savingholmes Your plan for you sounds great and is also v tax advantageous. Makes a lot of sense having tax free cash to work with.

I have rented for so long it is not a problem - lived in places for years at a time so, I guess I dont have that need for a home I pay a mortgage on as much as I need choice and to not feel trapped. 
I never wanted to do 2.2 kids, a marriage, house with a picket fence and a man bringing in the money and surburbia though I fully accept for some people it is the right dream for them. As you say we all have different dreams and being wise with choices with money helps us make them happen.

As I can see all the money in the banks and company deals on my 12% return investment so its as stable as it can be bar extreme exceptions and I trust the company director.

skint_spice said:

Fabulously Frugal - you do you LWAP, I for one enjoy living vicariously 😂

Thanks - I will do my best to live large for you as well. Though living large this week was a lot of cuddling under my faux fur heated throw (!)  - which I did wait 18 months for and got for £90 instead of £140  thanks to a sale and my student discount card !
Fabulously Frugal may need to be my new strapline!

TallGirl said:

...
Another vote for checking other areas out. I was adamant I would only live in a 1 mile radius from where my first house was but I stretched it and I actually prefer here. I would never had said that before I lived here though. The benefits were not have obvious beforehand. 

Good luck with YNAB I am not into that at all or understand it but it seems to work really well for you. 

Tall Girl  I will indeed try looking in new areas - my current and last 2 areas I lived don't give me a garden or decent balcony option under £1m! (if lucky)

On Ynab - basically it works as a strict s/sheet, budget and dashboard.
- has a dashboard where you can see all accounts (bank synced) inc your credit card so you can see your NAV immediately and all cash accts and debts
- makes you budget only when cash comes in - so you cant budget promised for money
- moves in months so you can see where you have missed filling up pots for annual expenses etc
- encourages you to have lots of personal categories to save into especially long term annual 'true' expenses and long term wants
- makes you feel YNAB POOR as all your money is allocated to spends eg next months rent even though bank balances are high
- gets you off the CC float as the minute you spend on a cc (it treats it like its a bank) it moves the money from your relavant pot so £50 on groceries is moved from grocery pot to waiting to pay your cc.
- encourages you  get at least a full 30 days ahead in all your bills
- where you overspend on a category it makes you fill the overspending from another category - or shows a bright red in cc. so you can see if you overspend on going out you are having to remove it from another important category eg house saving or EF so you actively see how your choices affect your savings and your goals.

TallGirl said:. Being MF and in your own home will not only save your on rent in retirement but also give you so much security. 

@TallGirl this retirement angle is indeed the single deciding factor  on buying at some point in the next year - if I was still in my 30s I would wait longer, the FIRE figures are self evident.
I am still planning to buy in 2024  but wont until I get my invoices paid up and a clearer income structure - if the side hustles contract kick off like they are 'promised' to that could add a huge amount of income to my monthly and paid for travel. The thought of paying over a £1000 pm in interest to the bank to part buy somewhere and a £2k a month mortgage payment in a less nice part of town kills me when I have just calculated (see below) I actually live for free if not a slight profit!

My interest earnings on my house deposit calculations  - just under £8k on conservative estimate.
Looking at my other interest on my house deposit savings to see full calculations for last year.
I am averaging £22 a month on my nearly £12k h2b isa now so thats £270 a year tax free (should also get the £3k govt help when I buy) 
PB I made £275 last year (won £50) this month. Tax free.
my £23k s&s isa is all over the shop so ..lets say 4% estimate so about £944 a year. Tax free. EDIT Actual amount was £775.
the 12% I have now in my ltd corp acct so I pay 19% corp tax so just under £7k but then I can either use for SIPP as I have been doing so I dont pay the full 19% on it as I use some of this 'profit' to spend into my sipp or if I withdraw at 8.5% dividend rate ... yet to decide on this so lets say   £6.5k interest pa as a conservative estimate.
I also use £2k as my MB float which does make me money- just under £4k last year -but I probably could have a smaller float so I will ignore in my calculations.. Tax free
Some small interest in other banks. Ignore.

£270+£225+774 + £6500 - (not including smaller amts in some other banks or  the fact some extra money has gone into my sipp or my MB profit) = £7770 interest I earned  on my hse deposit last year  after tax- so thus after subtracting this .. my current rental is really costing me £452 per month  which actually is covered by me being able to claim more than this as use of home as office as I have a study and completely now WFH.
Cost to rent now = 0 or -£150 (!) 

Basically I am living for free now (and being able to invest more into my sipp with huge tax advantages and house savings and have money to do MB/casino). I can also travel as I wish and sleep well.
My figures have changed as I had a rent increase of £500 pm 3 months ago so before I was making £500 a month by renting.. 

Only 2 disadvantages are  I am missing out on property capital growth and the security of a paid for home when I retire. 
One could also argue I will be able to charge more of use of home as office on a £2k mortgage than now. 

So LaPlan 2024 plan is to save hard towards this deposit -I will start assuming I have a £2k a month house payment - so I get used to it -  
 £2k mortgage a month on current rates is about £1100 interest and £900 principal repay - so aim is really minimum £1k a month into hse deposit acct -  whilst adding to sipp as well - want to also  hit £10k in sipp contributions by April 5th. 

I realise i am on a MFW board but it is good to challenge the 'assumed' one should always do X.
I think it is all about what is right for you now in the current season of your life and sadly I think I do have to make a currently financially wrong but long term right decision to  buy this year.. once some elements are stable.
I feel very lucky that I have been able to be v frugal in many ways whilst living a big life and also being able to save.

So thanks all for making me look at the detailed figures, rather than assuming anything. All part of the new year reflection.

I will be watching myself  and recording to see how my ynab detailed tracking  this year (which I got for free as part of being a student) changes my spending/savings. First goal -= get to £1k this month extra Hse savings

SUBSCRIPTION services -  MSE win £23 - 
I had cancelled twice a flower delivery in Dec and they charged me as they delivered to my mum today. I already have a 25% negotiated discount on them. So I rang and got the money refunded. Crazy how difficult it is to cancel a subscription service and how it adds up 
Hello Fresh are the worse for this by the way. My mum having a nightmare with them...

beanielou

skint_spice said:

Fabulously Frugal - you do you LWAP, I for one enjoy living vicariously 😂

So do I   

Fortune_Smiles

Hi LaPlan 😁

I was a career girl too and decided in childhood that I wanted to be independent and child free.  It was still an unusual path to take in the 1980s when I started my career and a lot of people found it puzzling.  I have never regretted my choice and, although I did marry in my early forties, Mr F and I have a proper partnership and each of us has been the main breadwinner at some stage.

We spend a lot of time working to earn our money and shouldn't feel guilty about spending it.  I do sometimes feel awkward posting about spending on luxuries on a money saving site.  However, I remind myself that striving to budget and spend on things that are important to me and align with my values is not a waste.  We all want to live our best lives, should do so whenever we can and are not obliged to justify that to anyone.

Fortune x

Cheery_Daff

I think it's helpful, for me at least, to see people who are not in debt, and who have a decent income, still thinking about spending and saving carefully. I now earn more than I ever did, and am occasionally in danger of getting a bit spendy, but reading diaries keeps me on the straight and narrow. If I could only read diaries of people who were really struggling, that really wouldn't help - the variety is what makes this place special, I think 😊

I think my problem is that I want to be everything, all at the same time 😂😂 High flying professional (ha!), and also someone who potters around the homestead making jam and scything 😂 Fine, theoretically, but both take up an awful lot of time and energy!

Merlin's_Beard

Definitely agree with variety being the spice of life! I don't have the energy to live that jetsetting a life (nor would I enjoy it) but I love watching you do it LaPlan. There's a whole bunch of people here in a whole bunch of circumstances and I glean things from everyone's diaries and find them wildly interesting however similar or different they are to me.